In the early European session on Wednesday, the U.S. dollar lost ground against most major currencies as investors sold safe-haven assets on optimism American politicians will reach an agreement to avert the looming fiscal cliff.
Fiscal cliff negotiations picked up yesterday as President Barack Obama put forth proposal for tax hike on incomes over $400,000 in White House meeting with House of Representatives Speaker John Boehner on Monday.
Obama's new offer comprises $1.2 trillion revenue increases over 10 years and $1.22 trillion in spending reductions. While Boehner argued that Obama's latest proposal is still not balanced, the offer suggests that the two sides are moving closer to a compromise.
The greenback is trading at 1.6299 against the pound, its lowest level since September 21. The next support level for the greenback is seen at 1.635. At Tuesday's close, the pair traded at 1.6254.
The Bank of England policymakers voted 8-1 to leave the stimulus programme unchanged at GBP 375 billion, the minutes of the December monetary policy meeting showed today.
The Monetary Policy Committee members said the current size of the asset purchase programme seemed appropriate for the present. Meanwhile, for David Miles, the case for undertaking additional asset purchases was strong.
Against the franc, the dollar slipped to a 7-1/2-month low of 0.9108 with 0.90 likely to seek as next downside target level. The greenback-franc pair closed yesterday's trading at 0.9132.
The greenback underperformed against the euro, hitting 1.3274 for the first time since May 1. If the greenback declines further, it may break 1.33 level. The pair finished yesterday's deals at 1.3229.
Germany's business confidence improved more than expected in December, reports said citing survey results from the Ifo Institute today.
The headline business climate index rose to 102.4. The reading was forecast to climb to 102 from 101.4 in November.
Looking ahead, Canada wholesale sales for October, U.S. housing starts and building permits for November are due in the New York session.
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Forex News
May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.